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L.A. home prices undervalued, forecasting firm says

June 4, 2009 |  8:01 am

Economic forecasting firm IHS Global Insight says the real estate crash has now put home prices in Southern California below their historic norms. IHS bases its forecast on prices, interest rates, incomes, population density, and historic premiums and discounts in given markets.

By those measures, Los Angeles County home prices are now 6% undervalued, the firm says. Orange County is 11% undervalued, and the Inland Empire is 16% undervalued.

San Diego is 21% undervalued and San Francisco is 25% below normal, IHS says.

Home prices in the first quarter were down in 199 of 330 metro areas studied. In the fourth quarter, 312  metro areas posted declines.

"The deceleration in the rate of decline may indicate the market is beginning to stabilize," the report says. But it warns that  "it is too early to call a bottoming," as "job losses continue, housing inventories remain elevated and consumers remain wary in light of economic uncertainty."

-- Peter Y. Hong